Question

Bare Trees United issued 20-year bonds 3 years ago at a coupon rate of 8.5 percent. The bonds make semiannual payments. If these bonds currently sell for 91.4 percent of par value, what is the YTM?

Multiple Choice

• 8.98 percent

• 9.53 percent

• 9.13 percent

• 9.27 percent

• 8.42 percent

Answer 1

COUPON RATE 8.50% YEARS TO MATURITY 17 NPER 34 (years to maturity x 2) PMT 42.5 (face value x coupon rate)/2 FACE VALUE $1,000.00 PRICE = PV = $914.00 RATE = 4.77% rate(nper,pmt,-pv,fv) rate(34,42.5,-914,1000) YIELD TO MATURITY = RATE X 2 = 9.53% [ 4.77%*2)